What is Bitcoin: Gold, Oil or Cigarettes in Prison

Cointelegraph asked experts what they think the real identity of Bitcoin is, a commodity, a currency or something else.

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Cointelegraph asked experts what they think the real identity of Bitcoin is, a commodity, a currency or something else.

Aleksandar Matanovic is the Founder and CEO of the Serbian Bitcoin exchange. He thinks that bitcoin is still evolving, but definitely heading somewhere. He said:

“We have been running a local bitcoin exchange for exactly 4 years. During the first year, almost all of our customers were miners. In our second year (2013), some speculators appeared looking to take advantage of extreme price volatility. So, for the first 2 years, we had almost no customers who considered and used bitcoin as a currency. In the last 2 years the trend has slowly been changing. Mining became less profitable, price became more stable, so bitcoin generally became less interesting for miners and speculators. On the other hand, the number of our customers using bitcoin to buy something or for remittance has been increasing at slow and steady rate, and those are in fact the ones using bitcoin as a currency. To summarize, the data I have available implies that the public perception of bitcoin has been making a transition from a speculative commodity to a currency. I don't think that transition will ever be completed, since you will always be able to look at bitcoin both ways. It comes down to the question of how does the majority of the people use bitcoin? I think the answer is: as a currency. Even if that is not a correct answer at the moment, I am sure it will be in the couple of months or years.”

Complexity of cryptocurrency

Jani Valjavec is the Co Founder of Bitcoin payment processor, Cashila. Jani thinks Bitcoin is a more complex entity. In his words:

“Bitcoin has properties of both currency and commodity. Plus some others. It's a totally new concept, so we can't really frame it into existing definitions. Harder question would be what is Ether. All that plus internal fuel? New world, new definitions.”

Alena Vranova is the Founder and Director at SatoshiLabs. She is also of the opinion that bitcoin is both a commodity and a currency, and even a bit more. She said:

“I think Bitcoin is both a commodity and a currency, and more than that. Bitcoin primarily is a platform that can be seen as a base for different applications. One of them is Bitcoin as money. Therefore is should always be regarded in the context instead of labelling it.”

Considering a specific lawsuit where HashFast Technologies, a mining company sued to recover bitcoin paid to a physician for his promotional services, Alena believes it should be possible to have the disputes settled in Bitcoin, saying that for example, the Czech civil code says that the citizen can request settlement in money as well as replacement of the lost/damaged goods or returning the disputed value into the original state. However, with something fluctuating in price as much as Bitcoin does, this could be very dangerous, inviting many opportunists to seek unfair profits. She is also of the opinion that it should be made clear upfront, before entering any commercial relationship, on how eventual disputes or refunds will be handled.

Dual identity of Bitcoin

Michael Vogel of Netcoins, a bitcoin ATM provider in Canada, thinks that bitcoin can be considered to be both a commodity and a currency. He said:

“My opinion is that Bitcoin can be considered a commodity or currency, depending on the way it is used. Interestingly, the commodity value of Bitcoin is invariably tied to its value as a currency. From a regulatory point of view, the most important thing is that government agencies make a choice either way and officially legislate it. Government regulation around Bitcoin, although often perceived as a bad thing, actually helps bring clarity to businesses that might want to participate in Bitcoin, but are hesitant due to lack of legal clarity.”

Joel Cano is a FinTech, Blockchain and Bitcoin enlightenment expert. This is his opinion:

“It depends where you are or what you are using it for. In the case of EU is legally a currency, but for the CFTC in US is regulated as a commodity. In the case of the Banco de Mexico (Central Bank) is considered a Digital Asset (commodity) but for the Intelligence Unit of the Tax Authority was recently considered a cash substitute for certain type of operations. I believe Cryptocurrencies will make this concept to evolve and make the differences between commodity and currency to blurry in the near future.”

Scott Bambacigno, VP WW Sales for AlphaPoint, is a senior sales executive. Scott holds the opinion that bitcoin is both a commodity and a currency depending on application. He breaks it down like this:

“It's both. And its context dependent. Currently it acts much more like a commodity because of the price fluctuations. As the depth of liquidity gets deeper it will take much more to make the price move and at that point it will act much more like a currency.

Additionally, how people view and use it helps determine what it is. For those that are buying and holding believing the scarcity of bitcoin will cause a rise in value over time, bitcoin is more like a commodity. They are using bitcoin as a store of value relative to the product they traded it for.

For those buying and sending/spending bitcoin it is a means of exchange and is being used as a currency.

If Bitcoin is used to pay a fee to store data in the blockchain then it's more like a currency.

Intent, context and usage really help define what is Bitcoin.

Another example of context determining what is a bitcoin is how it is traded on an exchange. If it's traded as a futures contract then it's a commodity and the CFTC has determined it's under their jurisdiction.

I believe the IRS may have their own definition depending on context and usage.”

Roger Ver is known as the Bitcoin angel, investor and evangelist. He sums it up in one simple sentence:

“Currencies originated from commodities, so Bitcoin is clearly both.”

Academic view on Bitcoin

George Basiladze of Cryptopay had this to say:

“That is too academic. Bitcoins is like gold. It is a commodity which can be used as a currency.”

Randy Brito is a Bitcoin enthusiast and founder of bitcoinvenezuala.com. He puts it in one simple sentence:

“Bitcoin is money, just like gold.”

Roman Mandeleil is the CEO and Founder at ether.camp. Roman said:

“Commodity is something that is used as a product like copper, oil or coffee , while currency’s only and main purpose is trading. That is why Bitcoin is a currency”

Paul Snow is the creator and founder at fact on. Paul’s opinion is that bitcoin is a currency. He said:

“Bitcoin is a currency, but the government isn't willing to provide the consideration due in terms of taxes that this implies. But the government is also unwilling to provide Bitcoin the freedom that is implied should it be considered a commodity either.”

David Mondrus is a highly technical ecommerce executive. His summary:

“Many things can and are used as currency. Cigarettes in prison is one that leaps to mind.”

Eric Grill is the CEO at CoinOutlet, Inc. These are Eric’s words:

“Salt is one of the oldest currencies in the world, cocoa beans in South America both used as currency. The US Treasury department can't agree on what it is, one branch (Fincen) says it's a currency, another department (The IRS) says its property. It can be both.”